18 February 2020

Portfolio Diversification Promotes Elnusa’s Performance

Jakarta, February 18, 2020. PT Elnusa Tbk (Elnusa) in 2019 posted consolidated operating revenues of Rp8.4 trillion, growing 27% (year on year / yoy) compared to last year’s acquisition of Rp6.6 trillion. This consolidated business income was contributed by the energy distribution & logistics services segment by 49%, upstream oil and gas services 46% and supporting services by 5%. In addition, upstream oil and gas services also recorded a significant growth of 45%, from the previous Rp2.6 trillion in 2018 to Rp3.8 trillion in 2019.

In terms of consolidated net profit, Elnusa posted IDR356 billion, growing 29% compared to last year’s acquisition of IDR276 billion. Net profit contribution was dominated by the energy distribution & logistics services segment.

Elnusa’s Finance Director Hery Setiawan explained, Elnusa’s 2019 financial performance was influenced by many factors. Some of them are the decline in world oil prices and the transition of termination blocks to Pertamina. The fall in oil prices has led to a demand for large discounts on Elnusa oil and gas services prices. Conversely, the increase in oil prices does not directly increase the price of Elnusa’s oil and gas services, but it excites oil and gas exploration activities. Meanwhile, the transition of the termination block to Pertamina and the enthusiasm of oil and gas exploration activities provide positive opportunities for Elnusa.

“These positive opportunities that we later achieved as best we could. Through a portfolio diversification strategy and complete oil and gas service competencies, upstream to downstream, we ensure to continue to grow.

Opportunities in the energy distribution & logistics services segment are achieved and realized as possible. Upstream oil and gas services are optimized so that they are able to adapt to falling world oil prices and seize various opportunities. Supporting services support and complement the two existing service segments. As a result, we managed to improve financial performance with significant growth, “said Hery, through an official statement, Tuesday (18/2).

Hery continued, the growth of business income and consolidated net profit this year was very significant. Growth above 25% (YoY). While profitability ratios still need to adapt to various external factors. Consolidated gross profit margin reached 10.3% and operating profit margin to 6.3%. While the net profit margin was recorded to increase to 4.3% from the previous 4.2% (YoY).

Since the decline in world oil prices and various changes in the condition of the national oil and gas industry in the last three years, Elnusa has continued to make various breakthroughs so that it can maintain its performance. The main thing is to adapt business strategies to the challenges and opportunities that exist.

“Although the net profit margin is not ideal. The growth of Elnusa’s consolidated operating income and net profit is very significant. Armed with the 2020 capital expenditure plan, we believe it will grow even higher,” continued Hery.

Capital Expenditures 2020

Elnusa’s capital expenditure realization in 2019 reached Rp700 billion, absorbed 70% of the initial target of Rp1 trillion. Utilization is for various investments that support business growth. Some of these include ocean bottom nodes investments for seismic sea surveys and the acquisition of the Amurang LPG depot in North Sulawesi.

“We are realistic that capital expenditure absorption must adjust to current business and market conditions. For 2020, we have budgeted higher capital expenditure compared to 2019, around Rp1.4 trillion. Utilization is also for various investments that support growth. One of them is the fabrication of hydraulic workover units for well rework services, where we are the market leader in this service in Indonesia and Pertamina’s downstream business infrastructure development, “said Hery.

Hery also revealed that Elnusa was exploring several models of funding sources for this capital expenditure. Because the plan for funding sources comes from both internal and external (capital markets).

Achievement Targets 2020

In general, Elnusa targets business revenue growth to reach around Rp. 9.1 trillion, or to grow above 8%. Consolidated net profit is expected to reach above Rp400 billion. “Looking at the business prospects going forward, we are optimistic that we can achieve the 2020 performance target,” concluded Hery. ***

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